Scottish & Newcastle (S&N) and SA Brain have teamed up to extend their respective distribution networks.
Under the agreement, the two brewers have created a new free trade organisation in Wales, which aims to combine Brains local knowledge with S&N's resources and international brands.
Under the agreement, S&N will take on responsibility for the sales, distribution and technical support of Brain's ale portfolio in the freetrade alongside its own beers and ciders. S&N will make Brains brands available to its freetrade customers in Wales and help to grow distribution of Brains beers outside of Wales.
S&N has paid Brains an undisclosed sum for the goodwill element of its 1,800 freetrade accounts and corresponding loans book.
Brains will also contract brew some S&N brands from 2010 onwards for seven years. S&N brands such as Foster's, Heineken and Kronenbourg 1664 will be available in Brains' 260 pubs.
The two companies have also agreed to operate the regional wholesaler William Hall & Son, which is currently wholly owned by SA Brain, on a Joint Venture basis.
Brains will continue to supply its on and off trade national customers directly, and develop its successful pub and hotel business.
"We are delighted to have reached this agreement with Brains, and to take on responsibility for distributing their wide range of hugely popular ales in the free trade," said S&NUK managing director Lawson Mountstevens.
"It will build on our position in Wales and grow distribution of our leading brands portfolio. It is critical that we maintain the excellent level of support that Brains has provided to its free trade customers; and we firmly believe that access to S&N's wider portfolio and business support will provide new opportunities for these independent operators."
Scott Waddington, chief executive of SA Brain added: "This agreement represents a significant strategic step for Brains, focusing our future business on increased investment in our brewery, beer brands and pubs. Indeed, it is envisaged that the level of investment to support Brains beer will increase through continued sponsorship of the Welsh Rugby Union, the Celtic Crusaders, Welsh football and Glamorgan cricket, as well as a renewed commitment to advertising our brands.
"S&N's distribution network and large UK customer base will provide fantastic opportunities for Brains beers to grow and gain wider appreciation."
In total, 34 employees from Brains freetrade sales and administration team will transfer to S&N. The new agreement should come in to place by May 2009.